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Tuesday, September 25, 2012

50 Pitfalls for Builders to Avoid

Too often a modular home builder does something that cascades into something larger and that in turn can put them out of business. There are a lot of things that can go wrong and here are 50 pitfalls to avoid to help keep you from having a major “Crash and Burn”!

Planning

No Sound Business Idea: Without a sound idea, how will you develop your business plan? Just saying you want to become a builder isn’t good enough anymore, you’ve got to have a good idea why you are in this business.

No Business Plan:Oh no, Mr Bill! Say it ain’t so! Without a solid business plan, there is no way that you will ever be able to turn your business into a successful operation and prepare to crash and burn.

Market Research: If you don’t know your market, do you really know your business? You can’t be everything to everybody.

Bad Timing: There is a right time to start a new business, and a wrong time. If you roll out your business while the market is in this recession, you may fail before you ever even get off the ground.

Good Location: Location is everything. If your office is going to be in your home, make sure the neighborhood reflects your business. If your neighborhood is not attractive, save up and rent an office or showroom somewhere else.

Choosing Suppliers: There are great modular home factories, good modular home factories and there are some that are just hanging in there. Choose the one that closest mirrors who you are marketing to.

Don’t forget the Competition: Every business and every concept has competition. If you do not recognize it, you are missing something important. Identify your competition can help keep you inn business.

Choose the Right Type of Business: Sole proprietorship, partnership, LLC? Choosing the right business form is vital.

Seek Advice: It is important that you turn to successful people for advice in the planning process of your business; otherwise you will not be successful. If you were going to market to seniors, seek out builders that already are successful selling to them

Do You Really Know Construction: Simply put: If you’re not skilled in all phases of construction and sales, prepare to crash and burn.

Personality

Are You Mentally Strong: It takes a certain attitude to be a successful modular home builder. Do you have what it takes to lead rather than follow?

You’ve got to be Analytical: If you can’t take an analytical approach to the decisions you make and try to rationalize things, you are just kidding yourself.

Be Self Critical: As a modular home builder, you need to be willing to self critique. A business owner who is not critical of his or her self is an unsuccessful one.

Lack of Desire: You may be working for a builder right now and think that you can do that because he looks successful and everybody knows he’s an idiot. I want to make money. That’s no reason to start a business. Desire is a burning thing in your chest and without the desire you will crash and burn.

Low Motivation: Just like desire, motivation is critical for business success. If you are lacking motivation, perhaps you are in the wrong business. Get Motivated or get a job at WalMart.

Over Confidence in Expansion: While expanding may be a necessary part of business, if you become over confident in your ability to expand, your business will surely flop. I have seen many builders get into the restaurant business because they like to eat and think it would be easier than building houses. Putting up another model home in a remote area might be just as disastrous.

Assuming: A lot of builders make assumptions about the business and guess what? They’re usually wrong. Get the facts and stop making assumptions.

Failing to Take Responsibility: When you are an entrepreneur, you have to accept responsibility for failures in your business; you cannot simply shirk them off onto someone else’s shoulders. Building someone’s home is a lot of responsibility.

Procrastination: If you procrastinate, or are lazy, or otherwise simply cannot get things done, you are NOT suited to be a builder.

Being Overzealous: OK, you’ve opened your doors, advertised and you’re going to build 50 homes in the first year! Yep, that’s a real possibility!

Finances

Not Having Enough Money: Cash is KING! You’ve got to have it in savings or lines of credit. If you are not prepared financially, you will sink.

Credit Rating: You will run across situations where loans and other assistance is required, but if your credit is destroyed, your business will crash and burn!

Control Your Spending: Overspending on your credit card, for example, without any thinking or research can have a serious negative impact on your financials.

Budgeting: Budgeting is a vital part of running a business smoothly, so make sure yours is good! Poor budgeting will prevent you from getting a handle on your finances.

Unrealistic Targets: If your financial targets are unrealistically high and you continue not to meet them, your business will never succeed. You need to realistic in setting goals.

Be Organized: When it comes to financials, organizing is absolutely vital. Keep yourself organized and keep your financials in order and you will succeed.

Be Honest: To yourself or to your employees, dishonesty can destroy the financial standing of a business.

Taxes: Pay your taxes as often as you can. Work out a basic plan, stick to it and always be honest about your taxes if you want to prosper.

Discounts: Work with your vendors and ask about discounts. Some offer them if you pay your bills within their terms. Think of a missed discount as an expense.

Set Goals: Plan how many homes you can build and set your business goals accordingly. Review the number of homes being built and adjust your goals to meet the new numbers.

Advertising

TOMA: Top of Mind Awareness. Create ways that people will think of you first when they are looking to build a home.

Update Your Website: There is nothing older than yesterday’s news and if your website still has offers and open houses from 2007 on it, get on the ball and update it.

Word of Mouth: Word of mouth is actually a powerful marketing tool. What are you doing to spread the name of your business?

Choose the Right Advertising Medium: Advertising is everything. Choose the right medium or your business may flop. Hard. Remember, 90% of all new home buyers start their search on the Internet.

Advertising Budget: Stick to a budget when you pay for advertising. Do not go over your budget no matter what.

Track Your Advertising: If you have a website, consider adding “Site Meter”, a free widget that will tell you how many people are visiting your site and what they are viewing. If you can’t track your advertising sources, you’re doing something really wrong.

Picking the Wrong Modular Factory: Is your modular factory doing what it takes to bring you leads and training? If not, they’re the one you need.

Choose a Memorable Name: “Jack’s Houses” may be an accurate statement, but will it really draw customers to you? Your name is half of your branding. Can your customers remember your name?

Business Cards: Carry business cards at all time and be prepared to pass them out at all times.

Poor Business Cards: Forget cheap business cards. Buy nice, legible and attractive business cards. Don’t print them on your computer, that is so tacky!

Networking

Rabbit Hole Syndrome: Detaching yourself from the people around you is an excellent way to destroy your business.

Talk With Other Builders: Networking is a powerful part of business. If you fail to network effectively, you will surely crash and burn. Get on the Internet and find builders like yourself and find out what they are doing to battle this recession. Join your local NAHB chapter.

Good Employees: Pay close attention to who you recruit and hire. Recruiting is an art: look for employees that will stay for the long term. Don’t forget, if you hire someone and you get the feeling almost immediately that it isn’t going to work out, get rid of them…fast.

Don’t Badmouth Your Competitors: You don’t have to like your competitors, but you do have to cooperate with them. Remember, what goes around, comes around!

Offer Your People Benefits: Offering benefits to your staff is the best way to keep them around. If you don’t offer any incentives, they will go on to bigger and better things. Not every benefit has to cost you a lot of cash. Buying a gift card to Olive Garden for one of your employees and their family will go a long way. Happy spouse theory.

Staying Informed: Stay informed with what is current in your industry, or your competitors may pass you by.

Keep Things Fair: Keep things fair with your competitors. Don’t steal ideas or products. Respect one another even if you are competing.

Cold Calling: Cold calling is not the answer to networking. Meet your prospects in person first. If you really think cold calling is the answer, get the ultimate list…The Yellow Pages! Surely someone in it wants a home.

Don’t Get Too Personal: Getting to know your prospects and customers is a great way to spread the good word, but getting too personal can be a deal killer.

Don’t Drink at Work!: Just because there is alcohol in the office or in your vehicle doesn’t mean you have to drink it. Never drink around prospects, customers or your employees. One slip of the tongue can cause you to crash and burn!